BASF investment in sustainability saves hundreds of millions

BASF Canada: The argument for sustainability

Since 2002, German chemical company BASF has reduced the global greenhouse gas emissions associated with its chemical production by 34.6%. Last year, the company saved $270-million in operational costs at its Ludwigshafen head office alone. On Oct. 30, Laurent Tainturier, president of BASF Canada, will be participating in a round-table discussion at the National Post-sponsored CIMA Canada Conference 2012 at the MaRS Collaboration Centre in Toronto about whether or not sustainability is the next industrial revolution, or a just a distraction from the true purpose of business. On Monday, Mr. Tainturier spoke with the Financial Post’s Dan Ovsey. The following is an edited transcript of their conversation.

QThe concept of sustainability seems to be woven into all of BASF’s messaging and promotional material. Why is that?

A We really look at it not as a marketing tool, but really a strategy pillar and what leads our actions in many activities. I think what we try to do is simply look at the world around us and measure the challenges that our society will be confronted with in the future and try to understand how a company like BASF will be able to help solve them. We have just developed a strategic approach in three main areas. One is about resources, environment and climate. One is about food and nutrition. And one is about quality of life. With that we try to cover, on one hand, all of the areas where sustainability challenges are going to hit, and then put in front of that sustainable solutions that we believe the chemistry industry can bring.

We started realizing that, in fact, sustainability had to be considered in a broader view

QHow has your sustainability strategy evolved since its early days?

A I think one of the main evolutions was that at the very beginning we focused a lot of effort on making our own sites and activities more sustainable. There was a strong focus on our own products and sites. Then we started realizing that, in fact, sustainability had to be considered in a broader view, and we started working on value chains, which meant truly considering the environmental impact of products — from the sourcing of raw materials to the disposal of end products that are manufactured by our workers for consumers. This is where we realized that we can have a huge impact as a company not only by better running of our own operations but by also giving end products that in their use are going to provide more sustainable solutions.

Related

A I think one great example of the results of our sustainability strategy is what we call the production verbund — a German word that’s difficult to translate — but probably the best translation would be “interconnectedness,” which means that in our manufacturing operations, verbund refers to the strategic integration of manufacturing operations. For instance, heat and energy generated by certain plants and processes can be captured and reused to operate other plants and processes. We are also systematically using by-products from certain processes. For our global headquarters, this verbund concept brings annual cost savings of about $270-million. It’s also providing annual savings of 1.5 million of CO2 equivalent. So this is interesting, because it is at the same time helping our competitiveness and profitability but also having a great environmental benefit. For 2011, we disclosed that the savings alone by the use of our products in various industries was up to 330-million metric tons of CO2 equivalent.

QHow do you get the cynics to understand and believe in your sustainability efforts?

A We set very high sustainability standards for ourselves, connected to clear targets and above all, very transparent reporting. Just coming out of my mind, I think BASF was among the very first companies that was disclosing the total carbon footprint. We are all also members and very active participants in global reporting initiatives. This affects everything we do. For example, starting with our annual report where we are just opening the book and exposing issues or competitions we are facing, and I think this very open and transparent way of communicating is appreciated. Obviously there is a dialogue and we get questions, but at the end of the day we think that’s a positive thing.

Q What’s next for BASF’s sustainability campaign?

A We are focused now on our new strategy for 2010-2020. We believe that a significant driver for our growth in this period is going to come from more innovative and sustainable solutions. That’s what we’re really focusing all our efforts on and where we believe our success will come from. We’re reinforcing every day the importance of this growth driver. We are more and more involved in dialogue and events and meetings with people, including those within Canada, so that more and more people can be convinced that we can still do great business while being environmentally sustainable. I think that one important dimension that we try to promote is collaboration. We need to have a new kind of collaboration. First of all, it will open up innovation if we understand needs and challenges. Certainly, we have to involve all stakeholders like government representatives and municipalities; they are confronted with major sustainability initiatives. I don’t think it’s about playing with marketing. I think major companies have a role to play in terms of raising the bar with respect to sustainable solutions in the market.

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